The US dollar index rose slightly in the overnight session as investors reacted to reports that the Federal Reserve was considering exiting its asset purchases next year. According to the Wall Street Journal, the Fed officials plan to start winding down the purchases in the upcoming meetings depending on the strength of the American economy. The currency will later react to a statement by the Fed chair, Jerome Powell. It will also react to the latest US retail sales numbers.
The British pound was little changed ahead of a data dump by the UK. The Office of National Statistics (ONS) will publish the latest UK employment numbers in the morning session today. The numbers are expected to show that the number of claimants declined in July while the unemployment rate remained unchanged at 4.8% in June. Analysts also expect the numbers to show that the average earnings with and without bonuses increased in June. The ONS will then publish the UK inflation numbers on Wednesday and retail sales on Friday.
US stocks soared to a record high as investors largely ignored the crisis in Afghanistan. In a statement, Joe Biden blamed the crisis on the country’s deposed leaders and the military. Equities also rose ahead of key retail earnings. Companies like Target, Walmart, Home Depot, and Lowe’s are expected to publish their quarterly results this week. Analysts expect that the retailers did relatively well in the second quarter as the country reopened.
EURUSD
The EURUSD pair was little changed at 1.1770 in the overnight session. This price was substantially higher than this week’s low at 1.1705. On the 4 hour chart, the pair has been at the same place as the 25-day and 15-day moving averages while the momentum oscillator has risen. It is also slightly above the important support at 1.1750 and has formed an inverted cup and handle pattern. Therefore, the pair will likely resume the downward trend before or after the US retail sales data.
AUDUSD
The AUDUSD pair declined slightly after the Reserve Bank of Australia (RBA) published minutes of the recent meeting. The pair fell to a low of 0.7300, which was slightly higher than this month’s high of 0.7420. The pair is below the 25-day moving average while the MACD is below the neutral line. It also seems like it has formed a small head and shoulders pattern. Therefore, the pair may break out lower as bears target the key support at 0.7280.
SPX500
The S&P 500 index rose to an all-time high of $4,482 in the overnight session. On the four-hour chart, the pair remained above the key 25-day and 50-day exponential moving averages. Oscillators like the Relative Strength Index and MACD have also been rising. Therefore, the path of least resistance is still to the upside.
